Ashok Leyland extends fall post June sales

Ashok Leyland has dipped 5% to Rs 93.30 in intra-day trade, extending its Monday 2% decline on the BSE, after the company reported single digit growth in total sales for the second straight month.

Ashok Leyland reported 7% increase in total sales at 11,108 units in June 2016 against 10,429 units sold in June last year. Total sales of the company rose by 6% in May 2016 to 9,875 units from 9,290 units in a year ago month.

“The company’s medium & heavy commercial vehicles (M&HCV) sales grew by 8% in June to 8,685 units from 8,016 units, a year ago. Light commercial vehicle (LCV) sales rose marginally at 2,423 units as against 2,413 units, a year ago”, Ashok Leyland said in a release.

On cumulative basis, during first quarter (April to June) of the financial year 2016-17 (FY17), the company's total sales rose by 11% to 31,165 units from 28,154 units during the same period last year.

Analysts at IIFL Institutional Equities expect Ashok Leyland’s volume growth to taper to 13% in FY17 (vs. 41% in FY16) as industry growth slows and competition chip away company’s peak market share, while rising commodity prices may put pressure on margins.

“Ashok Leyland may lose market share in FY17 as growth becomes more broad based (AL has lower share in medium-duty) and as competitor models gain traction. In FY18, we expect industry growth to come off after the pre-buying impact (for emission norm change) in FY17. GST (better utilisation of trucks) and DFC (shift to railways) may put pressure on truck fleet expansion,” analysts said in an annual report analysis.

At 12:40 PM, the stock was down 4.4% at Rs 93.55 on the BSE, as compared to 0.25% fall in the S&P BSE Sensex. A combined 14.46 million shares changed hands on the counter on the BSE and NSE so far.

Ashok Leyland Limited